Ikea bucks trend as sales edge up to £1.2bn

Published on Saturday 30 October 2010 23:31

Secretive Swedish retail giant Ikea yesterday bucked a difficult year for the home furnishings sector to post a modest rise in sales at its UK business.

• Ikea has become the UK's most popular supplier for all things for the home Picture: Ian Rutherford

The group said like-for-like sales in the UK and Ireland, where it has a total of 19 stores, nudged up 1 per cent to 1.2 billion during the 12 months to the end of August.

The increase came as the home furnishings sector shrunk by 7.4 per cent last year as consumers tightened their belts.

As a result, the rise was enough to give Ikea a 6 per cent market share in the UK, making it the most popular supplier of everything for the home from beds and tables to curtains and rugs for the first time, according to figures compiled by Verdict Consulting.

It is only the second time that Ikea has published breakout sales figures for the UK and Ireland, where its estate includes superstores in Edinburgh and Glasgow.

The retailer - famous for its flat-packed minimalist furniture - broke with its previous secrecy at the beginning of October by publishing profit figures for the whole group for the first time ever.

It said it had seen group-wide sales growth of 1.4 per cent to €21.8bn (18.9bn) during the year to the end of August, with its net profit increasing by 11.3 per cent to €2.5bn.

The Ikea Group operates 280 stores in 26 countries, with a further 34 outlets run by franchisees in 16 countries and territories.

Yesterday's data for the UK and Ireland showed growth in kitchen sales was particularly strong during the year, rising by 11 per cent on a like-for-like basis.

The group said its new full kitchen service package, under which it will plan, deliver and install kitchens, had proved to be very popular since its launch.

Other strong areas of growth included sales of "storage solutions", which were also up 11 per cent, while sales of dining room furniture rose by 9 per cent and children's products were up 4 per cent. Like-for-like comparisons strip out the impact of store openings and extensions.

The firm said customers had become more conscious of price during the year, leading to it cutting the cost of a number of lines. In a bid to continue achieving sales growth, it cut prices by 5 per cent across its entire range in September.

The group also plans to launch an improved home delivery service next year, increasing the number of different products customers can buy online by more than 500, from the current level of 3,700.Managers also plan to introduce a lower home delivery charge.

Martin Hansson, Ikea UK and Ireland's country manager, said: "It has been another challenging year for us but despite the overall home furnishings market being in decline, we have delivered a small growth.

"By focusing on two key areas - affordability and improved service levels - I am convinced we will continue to see stable, if not increased visitation to our Ikea stores over the coming period. I believe we will achieve growth by continuing to lower our prices."

The group spent some 11 million improving its stores during the period, including adding self-service checkouts at 12 of its outlets.